1b: Creating a managed economy, 1939-51 Flashcards
summarise the impact the war had on government intervention
Just like in WW1, the government/PM (Winston Churchill) took control of war production and developed several ministries to control the wartime economy, they were given extensive legal powers to intervene and take over the running of essential industries.
- military expenditure
GB had managed a degree of rearmament before the war but there were still shortages
- in 1940 when there were extreme shortages and GB appeared to be losing, the state intervened further meaning that production and expenditure went up. produced 15000 aircraft in 1940 rising to 47000 in 1944 and between 6-8000 tanks per year.
- 1939, 15% of nation income - 1945, 51%f national income
economic aid
from usa
- between 1939-41 the USA offered GB considerable help despite it being a neutral country
- the 1939 American Neutrality Act initially allowed GB to buy supplies with cash only but by Dec 1940 GB’s cash and gold reserves were spent so they arranged a credit agreement known as the Lend-Lease-Agreement where GB would pay the bill post war
post war austerity
economy shrank by
- GB trade damaged severly again as GB economy shrank by 1/4 and trade by 2/3
consequence of war on trade - other countries
- not only had GB ships been destroyed but other countries were ruined and could no longer afford to buy GB products whilst the USA benefited from all the loans they gave during the war
- economist John Maynard Keynes visited Washington Aug 1945 to negotiate GB emergency loans with the belief it should be a non-repayable gift in recognition for GB war efforts; this was not reciprocated by USA
marshall plan- Britain ineffective spending
1948 George Marshall (US secretary of state) proposed extensive loans to Europe out of fear of communism; GB was one of the biggest recipients of Marshall Aid in 1948 having £2.7b
- GB failed to use Marshall Aid to reinvest in industry and used it to pay for general expenses
- GB continued with the policy of national service until 1965 and got involved with other conflicts during 40s and 50s
-nationalisation
- the state took control of coal, power, railways, ship building and banking with the aim of creating full employment from them
what industries did labour nationalise
Labour introduced the acts to nationalised businesses: The Coal Industry Nationalisation Act 1946; The Bank Of England Act 1946; The Transport Act 1947; The Electricity Act 1947; The Gas Act 1847; The Iron and Steel Act 1949
- shareholders of the businesses were compensated when they were nationalised; e.g. the private rail companies were bought for £1b but the total cost was £2b, this left little money to modernise and improve the service
how much did the economy grow after 1948
full employment between 1947-51
- percentage of world trade dominated by GB grew from 17% in 1939 to 20% in 1950 and exports grew by ~ 80%
- after 1948 the economy grew by 4% pa
